Total Loss in Car Insurance

A total loss in car insurance refers to a situation where your vehicle is deemed irreparable or when the repair costs extend beyond the car’s current market value (IDV). This often happens in severe accidents or if the vehicle is stolen.

When faced with a total loss, Reliance General Insurance steps in to ease the financial burden. Our online claim settlement process and quick survey response makes recovering from the loss easier and hassle-free.

So, even if it is an accident or a theft, Reliance General Insurance’s total loss insurance ensures you’re well-supported through the recovery process.

We feature:

What is the Total Loss in Car Insurance?

Total loss in car insurance means when your car is damaged to an point where the car is beyond repair. If the car is no longer safe to use and permanently destroyed, the car is declared as a total loss.

This can happen due to two types of situations:

1. Car Theft: When the car is stolen and is declared untraceable, it is considered a total loss.
2. Car Accidents: If the vehicle is involved in a severe accident, leaving it irreparable or unsafe for use, it is also declared as a total loss.

To explain this better, let us consider the following example:

Suppose you are travelling for your work and your car undergoes an electrical malfunction, causing a fire that destroys most of the vehicle’s essential components. The repair shop estimates the cost of repairs to be ₹6 lakhs, while the Insured Declared Value (IDV) of your car is ₹7 lakhs. Since the repair cost is more than 75% of the car’s IDV, it would be classified as a total loss.

How is the Total Loss Value in Car Insurance Calculated?

The total loss claim is calculated based on your car's insured declared value (IDV).

What is Insured Declared Value (IDV)?

The insured declared value​ (IDV) is the maximum claim amount that we will pay when you claim your Reliance car insurance in case of accidents or theft. This value is set when you buy your insurance based on the car's current market value and depreciation over time.

It is crucial in car insurance as it directly influences the premium you pay and defines the amount you get when you claim your total loss insurance. A higher IDV means better coverage but also results in a higher premium, while a lower IDV gives lower coverage at a lower premium.

How is IDV Calculated?

IDV is calculated based on your car’s market price, as listed by the manufacturer. It also accounts for the depreciated value of your car over time based on the vehicle's age. Thus, the IDV decreases with time as your car’s age increases.

Here’s a general guide for calculating IDV as set by the IRDAI:

Depreciation rate for specific car parts:

Thus, in case of a total loss of your car, you will get reimbursement based on the IDV and applicable depreciation rate. That is, you do not get the total cost of the car spent when purchasing it.

Factors Affecting Insured Declared Value

Make and Model

Your IDV depends directly on your car's make and model. Luxury or high-end cars have a higher IDV than regular cars due to their higher market value and cost of repair.

Car’s Age

The IDV in car insurance governs the age of the car. For example, a new car will have a higher IDV, whereas older cars have a lower IDV due to higher depreciation, which reduces their market value over time.

Car’s Health

Your car’s health determines its market value and also affects its IDV. A well-maintained car retains more value than one with excessive wear and tear or damage.

Geographical Location

Due to higher risk factors, cars in urban areas or regions are more prone to accidents or theft. Conversely, cars in less risky areas are less likely to incur damages. Thus, the IDV varies in both cases.

Depreciation Rates

As mentioned above, the IRDAI sets the depreciation rates, which reduce the coverage, i.e., IDV, with time. The older your car, the higher the depreciation and the lower the IDV.

How to Increase the Total Loss Insurance Coverage in Car Insurance?

With your regular car insurance, the claim amount you receive in case of a total loss of your vehicle depends entirely on the IDV and applicable depreciation rates. So, if you have set a lower IDV to save on premiums, the coverage will also be lower. Additionally, if your car is older, a depreciation deduction will be incurred from the payable amount.

However, you can increase total loss insurance coverage by opting for respective add-on options. At Reliance General Insurance, we offer a wide range of 10+ add-ons that cater to car owners' diverse needs.

You can opt for our Return-to-Invoice or Total Cover add-ons to enhance your car insurance coverage.

Return-to-Invoice Cover

Our RTI cover reimburses the car’s invoice price, i.e. the original amount spent while purchasing the car, in case of a total loss. We also cover the cost of first time registration, road tax and applicable insurance cost of your car.

Total Cover

With our total cover add-on, you will receive compensation based on the full on-road price of your car in case of a total loss. This includes the registration fee, Octroi, any government-issued charges and insurance premium on a pro-rata basis.

Cost of Premium for Total Loss Insurance

The total loss insurance premium cost depends on various factors. Some of them are:

• Make and model of the car: A high-value car requires higher coverage and vice-versa.
• Insured declared value (IDV): IDV is the total payable amount by us in case of accident, theft or other incident. Thus, it directly influences the premium price.
• Location: If the car is used in a high-risk area, the likelihood of claiming insurance for total loss increases, thereby increasing the premium.
• Claim frequency: If your claim frequency is higher, your premium price also increases as you are considered a risky driver.
• Safety features: If you have installed safety features, such as anti-theft devices or EBS, your premium prices will be lower than those of regular car owners.

These factors influence the premium price irrespective of why you claim your insurance. To make an informed decision and have a realistic estimate of the car insurance price, use our online premium calculator.

How to Claim Total Loss/Constructive Total Loss with Reliance General Insurance?

1. File your total loss claim with us within 24 hours using any one of the following methods:​
   

1. ​​​Call our paid helpline number +91-22-48903009
2. Go to our Car Insurance Claim page
3. Log in to your Reliance Self-i App
1. Obtain a stamped copy of the FIR and non-traceable report from the nearest police station if your car has been stolen.
2. In case of severe damage, our claim expert will inspect the extent of damage to your car.
3. Receive a report from the surveyor confirming that your car is declared a "total loss" and cannot be used. Also, get a proof of RC cancellation from the RTO.
4. Submit the completed claim form and required documents to us. Once approved, you will receive the compensation based on your IDV or the total invoice price of your car (if you have opted for the RTI or total cover add-on).

Documents Required to File a Claim for Total Loss Insurance with Reliance General Insurance

• Copy of your car’s RC
• ​Copy of the driver’s driving licence
• Surveyor's report
• Copy of your car insurance policy
• Copy of FIR (in case of theft)
• Estimate from the repairer
• Claim form (filled and signed)
• No trace certificate (in case of theft)

What is Constructive Total Loss in Car Insurance?

CTL, or Constructive Total Loss in car insurance, is when the damage to your car is extensively high, which is higher than its market price. We declare your vehicle as CTL when there is a minimal chance of restoring your vehicle, and it exceeds 75% of the IDV. In such a case, it is more economical to buy a new car than to restore the damaged vehicle.

You can claim your Reliance car insurance in case of a constructive total loss in the same way as mentioned above. We process the claim based on your policy coverage and your car’s IDV and depreciation.

Additionally, if your car is a total wreck, you need to cancel your RC and submit it to us while processing the claim.

Rules About Total Loss in Car Insurance

In case of a total loss, you have an additional responsibility other than filing a claim. According to section 55 of the Motor Vehicle Act of 1988, if your vehicle is declared as a total loss and cannot be repaired or used, the owner must inform their city’s RTO within 14 days of the incident.

The RTO then cancels your car’s registration and provides you with proof of cancellation of the Certificate of Registration. This document is mandatory when submitting your claim with us. The government of India has imposed this rule to prevent false claims and scrapping of stolen vehicles.

Total Loss vs Constructive Total Loss

In both cases, the compensation for the vehicle’s total loss is based on its IDV, but the key difference lies in the extent of damage and the cost of repairs.

Things to Remember With Car Insurance Claim for Total Loss

• Ensure that your insurance policy is not lapsed and renewed on time before filing a claim.
• To receive a higher reimbursement, purchase our return-to-invoice or total cover add-ons along with your own-damage car insurance or comprehensive car insurance.
• Without these add-ons, you receive a claim amount based on your IDV and car’s depreciation value.
• Do not forget to get a copy of the stamped FIR and proof of RC cancellation from the RTO before submitting your claim form.
• Apply for RC cancellation within 14 days of suffering from constructive total loss.
• Follow our policy terms and conditions for a successful total loss claim.

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FAQs

• How does Reliance General Insurance determine a car's Actual Cash Value (ACV) in case of a total loss?

  Your car’s Actual Cash Value (ACV) depends on the following factors:

  • Car’s age
  • Car’s condition
  • Modifications done to your car
  • Current market value
  • Mileage
  • IDV
• What are the main types of vehicle insurance claims?

  There are two main types of claims:

  • Third-party claims: These claims are made to fulfil third-party liabilities in case of damages done to any third-party car, person or property.
  • Own-damage claims: These claims are made when damages are incurred to your vehicles due to various insured reasons.
• What is total loss in insurance?

  Total loss in car insurance is when your car is damaged to an extent where it cannot be repaired and is totally damaged. The declaration of “total loss” of your car is done after thorough inspection by our surveyor.

• Which category does total loss fall into?

  The claims for total loss in car insurance are either made under our own-damage car insurance or comprehensive car insurance.

• What are the ways to ensure maximum coverage in case of total loss?

  You can ensure maximum coverage for your lost car by opting for our return-to-invoice or total cover add-on options. These are designed to reimburse the amount spent on buying the car.

• When will my car be declared a total loss?

  A car is declared a total loss when it is damaged beyond repair and unsafe to drive. Moreover, if its repair costs are more than 75% of its IDV, it is declared a constructive total loss.

• What is the benefit of add-ons in case of total loss?

  Without the add-ons mentioned above, the claim amount you receive is based on the predetermined IDV and depreciation deductibles. This does not cover the entire cost of your vehicle. However, with our add-ons, you get compensation for the invoice price of your lost car.

Disclaimer: *T&C apply. For more details on risk factors, terms conditions, brochure, and exclusions, please read the policy wording and CIS carefully before concluding a sale. Details mentioned here are for the product- Reliance Private Car Package Policy. UIN: IRDAN103RP0010V02100001; Reliance Private Car Policy – Bundled, UIN: IRDAN103RP0007V02201819; Reliance Private Car Policy- Standalone Own Damage UIN- IRDAN103RP0001V01201920; "A" Policy for Act Liability Insurance ( Pc /Tw/Commercial ), UIN: IRDAN103RP0003V01200102; A" Policy for Act Liability Insurance (Private Car) – 3 years, UIN: IRDAN103RP0003V01201819;

Premium: The premium mentioned for car Insurance is excluding taxes for the private car model Maruti Suzuki Alto 800 with cubic capacity of less than 1000 cc for a 1 year Own Damage Insurance policy for an IDV of ₹2,34,728. Premium used is 2,853/year as on 1 March 2023 and then converted into a per month basis, which gives us ₹238/month (2,853/12).

Network Garages: The number of garages mentioned is the total of all the garages empanelled across the country for different vehicle categories.

Claim Settlement Ratio: This is the overall claim settlement ratio for FY 2023-24 without claim outstanding at the start of the financial year as per public disclosure of Reliance General Insurance Co. Ltd.